Competition and complexity is hurting online media owners
A digital industry leader is calling on publishers to band together to fight their biggest foe, TV. Speaking at the “Advertising Technology: IAB Marketplace” conference in New York on Monday, Seth Demsey, senior vice-president of global advertising products and strategy for AOL Networks, lobbied for greater cooperation among online publishers.
“We all need to recognize that by focusing on competing against each other, a lot times what we do is talk down other people,” said Demsey in a telephone interview with Marketing. “What that does is create confusion as to the value of digital relative to TV.
“When marketers are confused they put their money elsewhere.”
Demsey also denounced the current system for buying and placing ads as unnecessarily complex, with an adverse impact on publishers’ bottom line. A digital publisher currently sees only about 45 cents of every $1 that a digital advertiser spends, he said; the rest gets sucked into what he described as a “whirling maw” of trading desks, networks, exchanges, data-suppliers, aggregators, etc.
Pointing out that 74 new advertising technology companies entered the market between 2010 and 2013, Demsey said the complexity of his business has been growing at twice the rate of revenues.
“It’s hard to get data from the 17 vendors that the agency needs to put [a campaign] together – whether it’s the audience data provider, the DSP, the private exchange slot, the audience verification, the rich-media guys, the interaction guys… there’s so much friction involved in the setup and ongoing maintenance of campaigns that none of us in the space are really getting operating leverage,” he said. “We should be able to make things easier as we grow, but they’re getting more complex.
“If I gave you a client objective and $250 million, you’re going to struggle to deliver in full.”
The good news, said Demsey, is that consolidation is inevitable, creating an opportunity to focus on the key elements required to grow the digital pie: creative thinking, innovation and premium experiences.
He cited the oft-used example of the App Store, in which users deal with a single entity rather than individual developers, as a future model for the digital ecosystem.
Demsey said when search is stripped out, there remains a significant gap between “eyeball time” and the amount of advertising dollars directed towards digital (display, mobile and video) advertising.
Video has the potential to help digital make even more significant inroads, particularly if used in tandem with other formats. “It captures attention, it’s a very well-understood model that helps TV dollars flow in, but really I don’t see video ads in isolation,” said Demsey. “The beauty of having a digital ecosystem is to target somebody with a video and then reinforce frequency with display and mobile.
“What I want to have is all the weapons in the arsenal meet a marketer’s goal,” he added. “I want to deploy them in the optimal way and help [advertisers] determine what their media mix and strategy is, and in a way that allows us to do this with as little friction as possible and as much data-sharing and learning as possible.”
